has his way, it won't have one in systems consolidation process at Chemical Banking Corp. and Chase Manhattan Corp. Mr. O'Leary, who has been anointed chief information officer at the combined bank, said in a recent interview with American Banker that a major goal of executives is avoiding "compromise gridlock" as they sort out which systems and platforms will prevail at the new Chase. "The most important thing managerially is not to drag it into a big beauty contest and let the roots of conflict start to grow," said the 39- year-old executive, who has been chief information officer and executive vice president at Chemical for two and a half years. "The value is there to make sure you act aggressively as a manager and make sure you make the decision properly, as opposed to a compromise vote." That appears to be a major lesson Chemical learned from its merger with Manufacturers Hanover earlier this decade. Mr. O'Leary said that key decisions this time around are expected to be made more swiftly - in large part because both Chase and Chemical have such proficient technology to begin with. "I think that the firms that have gone through numerous mergers recognize that they have to make critical decisions quickly, and migrate platforms," said Rocco Maggiotto, managing partner of the financial services industry consulting practice at Coopers & Lybrand in New York. "It's not a democracy." Industry observers agree that Chemical's experience in that previous merger, which generally received high marks, will be invaluable this time around. But they also agree that the Chase/Chemical pairing, which will create a $300 billion-asset banking company, will be a massive undertaking expected to take at least three years, even by the banks' own estimate. In some respects, the new Chase's chosen path to consolidate sounds like the model followed by BankAmerica Corp. earlier this decade when it brought Security Pacific Corp. into the fold. In that deal, BankAmerica officials made the big technology decisions early on in order to accelerate the consolidation and avoid an erosion of the customer base. Those benefits are also cited by Mr. O'Leary - along with a desire to eliminate interbank politics from the process and also to limit the risk of disrupting service to customers. "We're out hunting for value, not trying to insert egos," he said. "No one dominates the other. For most of the businesses we are in, these are two very strong competitors. So there is mutual respect. There really is." But cultural conflicts may also be avoided because Chemical entered into the deal the dominant player. Thus far, 43 key jobs have gone to Chemical executives, compared to 31 for Chase managers. And Chemical people will be heading the transition in technology and operations. Chemical president Edward D. Miller, who as senior vice chairman will be the No. 3 banker at the new Chase, is charged with overseeing technology and operations. Joseph G. Sponholz, the chief administrative officer at Chemical who will hold the same title at the new bank, will be responsible for managing the "merger office" for Mr. Miller. And among Mr. O'Leary's tasks will be responsibility for evaluating and signing off on all applications decisions related to the consolidation. Mr. Maggiotto said that consulting firms like his own that have put in bids to assist in the transition have been dealing with Chemical executives. "It's very clear to the service providers that Ed Miller and Joseph Sponholz will coordinate the services of professional firms," he said. But Mr. O'Leary insisted that managers from both banks will play key roles in the systems integration. Chase's two chief technologists will have jobs at the new bank; both will report to Mr. O'Leary. Douglas T. Williams was named deputy general manager of information technology and operations, and Craig D. Goldman will be in charge of distributed and advanced technologies. "We don't have a rule of thumb that you go 50/50 on platforms or on people," Mr. O'Leary said. "We're making decisions based on good business." His definition of good business means moving swiftly to make decisions based on a clearly mapped-out process. That's possible, Mr. O'Leary said, because both banks have solid, sophisticated technology for most lines of business. The banks have not yet decided which systems will be selected, but Mr. O'Leary did speak about how the choices would be made. In situations where one bank has a superior system, for example, the combined bank will move quickly to covert the weaker to the stronger. And in cases where both Chase and Chemical have solid platforms, he likened the choice to deciding which of two luxury cars to take on a long trip. "Making the decision begins with a refinement of what a Cadillac offers and a Continental doesn't," he said. "At the end of the day, if you take that journey, you're going to have a comparably good ride no matter what decision you made. Mr. O'Leary also spun a neat analogy to describe how the Chase-Chemical merger would differ from Chemical-Manufacturers Hanover. In the previous merger, decisions were made on an application-by- application basis. This time, executives will be looking to keep "suites" of products that are readily compatible with each other. "In the last transaction we rolled the new platform together thread by thread," said Mr. O'Leary. "This one will be closer to a quilt." He said the earlier integration was "technically very elegant." Officials looked carefully at operating platforms at both banks and chose the very best aspects of each. "And then we knit them together with code, we tested them, we installed them," he said. "And we rebuilt the training and operating protocols around them." By contrast, he said, the benefits of finding compatible product applications in building the new Chase's back office will be more control, lower costs, less risk to the customer, and greater speed. "What we will be doing is looking for compelling reasons why we should optimize to the last tidbit of technical elegance - and also why we should tune for the last nickel of efficiency - if we can get control and speed," said Mr. O'Leary. "I'm very impressed with the way they are approaching it," said Mr. Maggiotto of Coopers & Lybrand. "They appear to be doing a first-class job in managing the needs of the institutions." For now, the big systems decisions remain to be made. Chemical, for example, uses core retail banking software from Alltel Information Services Inc., while Chase's retail operation uses applications from other vendors. And in the check processing area, Chemical has committed to spend $50 million on imaging technology over the next five years. But Chase outsources a big chunk of its item processing to Fiserv Inc., Milwaukee. And Chemical, unlike Chase, uses a third party for some elements of credit card processing. "What we're doing on each of these is looking at what are the drivers that create a rational case for using a third party," said Mr. O'Leary. And while Mr. O'Leary did not say the combined bank would move many back-office functions to Metrotech, Chase's data processing and technology facility in Brooklyn, he called the center "world class" and a place with a "tremendous attraction." The executive also pointed to synergies in both banks' transaction processing businesses. Chemical's Geoserve, he said, has a stronger focus on cash management, funds transfer, and other domestic capabilities. Chase's Infoserve, in contrast, has excelled in overseas businesses like global custody and multicurrency settlement. Both units have been extremely profitable. "That's going to be one of the biggest wins because now a customer can go to one integrated platform and have virtually every operating service
